Project Taj Information Memorandum May'09

8/11/2019 Project Taj Information Memorandum May'09

1/15

Privileged & Confidential

HIGH STREETPage 1 of 15

PPPrrrooojjjeeeccctttTTTaaajjj

Information Memorandum

May 2009


2/15



Disclaimer

This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to

you. Taj Milk Foods Limited (TMFL / C ompany) is not soliciting any ac tion based upon it. This report is not for public distribution and has beenfurnished to you solely for your information and should not be reproduced or redistributed to any other person in any form.

The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not berelied upon such. TMFL or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to anyperson from any inadvertent error in the information contained in this report. TMFL or any of its affiliates or employees do not provide, at anytime, any express or implied warranty of any kind, regarding any matter pertaining to this repo rt, including without limitation the impliedwarranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their owninvestigations.

The Memorandum does not purport to be all-inclusive or necessarily to contain all the information that a prospective investor may desire ininvestigating the Company or its divisions, and may be subject to updating, revision or amendment. Neither the issue of this Memorandum

nor any part of its contents is to be taken as any form of commitment on the part of High Street or the promoters or any of its subsidiaries oraffiliates to proc eed with the investment envisaged by the issue of this Memorandum and High Street or the promoters reserve the right toamend the proposed timetable and/or the investment procedure, to terminate the procedure and to terminate any discussions and

negotiations with any prospective purchaser at any time and without giving any reason.

In no c ircumstances will High Street or the promoters or any of its subsidiaries or affiliates (including the Company) be responsible for any costsor expenses incurred in connection with any appraisal or investigation of the Company or for any other costs or expenses incurred byprospective purchasers in connection with the proposed investment in the Company.

Should this Memorandum (through the act or default of the recipient) reach other persons without our written consent, the recipient willindemnify High Street and each company in the promoters' group against any loss or damage or other liabilities (including all costs) whichthey may suffer as a result. In providing this Memorandum, the Company and its advisers undertake no obligation to invite the recipient to

proceed with a further investigation of the Company and its subsidiary companies, nor to provide the recipient with any additionalinformation, nor otherwise to negotiate with or treat with the recipient in respect of those companies.

By requesting the Memorandum, recipients agree that they will on request, promptly return to High Street, this Memorandum and all furtherinformation and material, sent or made available without retaining any copies thereof or any notes, analyses or information relating thereto.


3/15



Contact Details

After the receipt of this Memorandum, if any person is interested in discussing or require any further queries / details /

clarifications on this investment proposal, any of the following may be contacted:

Nirbhaya Mishra

Assoc iate Direc torHigh StreetNew Delhi

M: +91 98108 [email protected]

Anshul Jain

Assoc iate Direc torHigh StreetNew Delhi

M: +91 98103 [email protected]

Prospective purchasers / investors who wish to proceed with a further investigation of TMFL are asked to submit an Expression ofInterest ("EOl") / Term Sheet. The EOl should be submitted to High Street, for the attention of any one or more of the aforesaid,whose contact details are stated above.

As soon as reasonably practicable after the EOls / Term Sheets have been received, TMFL, at its sole discretion, and with theadvice and assistance of High Street, will evaluate the EOl's. Subsequently, one or more prospective purchasers may be

provided with access to a data room together with further information relating to the investment process.


4/15



Company Overview

Taj Milk Foods Limited, a Govt. approved Star Export Housecompany is an ISO

9001:2000 & HACCP companyengaged in manufacturing of milk products.

The Company is registered with Ministry of Agricultural, Government of India &

the MMPO Registration No is 288/R-MMPO/2001.The Company has also been

granted ISI Registration No is CM/l-9388097.

The Company has its Milk Plant at Sambhal, Distt-Moradabad (U.P.)about 150

km from New Delhi with a processing capacity of 6.50 Lac Ltrs Milk per day

producing 2000 MTMilk products per month.

The company has also developed its own VLC Network of around 900 Villages &is fully assured of good quality Milk Supply on regular basis.

Apart from the companys presence in Indian market it is Exporting its Produc ts

to countries like Bangladesh, Afghanistan, Pakistan, Syria, Turkey, Libya, Iraq,

Jordan, UAE, Singapore, Sudan Dubai etc under the brand name DairyDiamond.

In a very short span of about four years the brand has emerged in Premium

Category Milk Products registering export turnover of INR 300 Million (USD 7.5

Million).

The companys total turnover is INR 2300 Million (USD 55 Million).

The Company is also approved byExport Inspection Council of India No. MP-04-

030/06.


5/15



Company Overview (contd.)

Promoter Background

Mr. Ashok Batra, Managing Director

Possessing core competence in Milk Procur

ement and processing, Mr. Batra has been in the milk business for thelast 37 years. He started out as an ordinary milkman from Punjab, and then migrated to Delhi to set up a big size

dairy in the capital, and to Sambhal in the year 2000 to set up a Milk Proc essing Plant. Mr. Batra procures milk from

the vicinity of Sambhal.

Mr. Zakir Hussain, Whole Time Direc tor

Before joining the Company in 2001, Mr. Hussain ran a chilling plant, which was used by Mr. Batra for storing hismilk collection.

Apart from Mr. Batra and Mr. Hussain, Mrs. Parveen Batra (w/o Mr. Batra) and Mr. Sartaj Sarvar (s/o Mr. Hussain)

also ac ts as the Whole Time Direc tors of the Company.

Shareholding Pattern

The Company is a closely held company. Its shareholding pattern as on March 31, 2009 is:

Name Capacity %age holdingAshok Batra Promoter Director 36.73

Zakir Hussain Promoter Direc tor 13.33

Parveen Batra W/o Mr. Ashok Batra 0.42

Sartaj Sarvar S/o Zakir Hussain 7.33

Others Close associates & friends 47.81

Total 100.00


6/15



Products of the Company

ADULT MILK POWDER FULL CREAM MILK POW

DER FULL CREAM MILK POWDER SKIMMED MILK POWDER

PURE DESI GHEE WHITE BUTTER SALTED YELLOW BUTTER DAIRYMIX


7/15



Processing Unit of the Company

The processing unit of the Company is situated on a land parcel of over 30,000

sq mts at Distt. Sambhal, Moradabad, Uttar Pradesh. It is appx. 35 kms fromMoradabad, the export hub of brassware & other handicrafts, and around 160kms from Delhi.

The area is surrounded by milk surplus areas like Bulandshahr, Meerut, Bareily andBadayun, etc. Milk is collected from over 1000 villages of Distt. Moradabad,

Bareily, Badayun, and other adjoining villages of the state of Uttar Pradeshwhich has a capacity of generation of 400 million liters per day.

To ensure continuity of supply and consistency in quality, the Company has also

developed its own village level network of around 700 villages for direct freshmilk supply reducing dependence on the middlemen.

The Plant was installed & commissioned in the year 2002 with a modest handling

capacity of 0.15 million liters milk per day. Encouraged by enthusiastic response

from the market plant capacity has been increased significantly in last 6 yearsand is presently operating at a capacity of 0.65 million liters milk per day. This

capacity has been increased from 0.45 million liters milk per day as on March2008. The said expansion was funded by the internal accruals of the Company

besides the term loan.

All the equipments installed by the Company are from standard equipment

manufacturers like Alfa Level, Tetra Pak, L & T, Siemens, Kirloskar Cummins,Thermax and FEA etc.

The Company has also installed full-fledged raw material & finished goodstesting laboratory equipped with all the required apparatus from reputed

suppliers.


8/15



Process Flow Chart (with technical details)

Milk Reception

Process Section

Raw Milk Weighment - Milk Weigher

Dial TypeCapacity 500 kgMake - Neogen

Collection - Dump Tank

Capacity 300 ltrsMake Self Fabricated

Chilling Heat Exchanger

Capac ity 10000 LPHMake APVTemp Normal 4*C

Milk Storage Tank

Capac ity 20000 * 2 ltrMake Self FabricatedTemp Below 5*C

Milk Pasteurizer

Capac ity 10000 * 2 LPHMake Tetra PackTemp Range 45*C/75*C/5*C

Skimmed Milk Storage Tank

Capacity 20000 * 3 & 45000 * 1ltrMake Self FabricatedTemp Below 6*C

Cream Separator

Capac ity 10000 LPHMake Tetra Pac kTemp 40*C to 45*C

Cream Pasteurizer

Capacity 3000 LPHMake Chaddha SalesTemp 80*C / 8*C

Cream Storage Tank

Capac ity 5000 * 2 ltrsMake Food EngineersTemp 8*C / 9*C


9/15



Process Flow Chart (with technical details) contd.

Ghee Production

Ready for Dispatch

Cream

StorageTank

Butter Churn

Capac ity 2500 LPHMake Food Engineers

Butter Melting Vat

(Double Jacketed)

Capacity 2500 kgMake Food EngineersTemp 85*C/75*C

Prestratification Tank

Capac ity 2000 * 2 ltrsMake Food EngineersTemp 70*C

Ghee Kattle

Capac ity 2000 * 2 ltrMake Food EngineersTemp 104*C - 105*C

Ghee Settling Tank

Capac ity 2000 * 2 ltrMake Food EngineersTemp 90*C - 70*C

Clarifier

Capac ity 1000 LPHMake Tetra PackTemp 70*C - 60*C

Ghee Storage Tank

Capacity 5000 * 2 ltrsMake Food EngineersTemp 65*C - 45*C

Ghee FillingCold Storage - Granulation


10/15



Process Flow Chart (with technical details) contd.

Milk Powder Production

Ready for Dispatch

Skimmed

MilkStorageTank

Evaporation of Skimmed Milk

(Four Effect Evaporator Falling Film)

Capac ity 11000 LPHMake Food EngineersCalendia I, II, III, IVTemp Range 70*C, 62*C, 55*C, 50*CPre Heater I, II, III

Temp Range 20*C, 40*C, 60*CHigh HeaterTemp Range 85*C

Concentrated Vat

Capac ity 1200 * 2 ltrsMake Self FabricatedTemp Range 42 to 47*C

Concentrate Drying

Capacity 18TPDMake Food EngineersTemp Inlet Temp 180*COutlet Temp Depending uponProducts (78*C) for Skimmed MilkPowder

Powder Outlet(Shifter)

Capacity 60 Bags PHMake Food Engineers

Temp 35*C - 37*C

Skimmed Milk Powder - Packing


11/15



Distribution Network & Export Sales

Distribution Network

The Company has also developed its marketing network with more than 800 distributors across the length & breadth

of the C ountry & has opened its own depots and has also appointed C & F agents in most of the consuming states.

The Company has also appointed sufficient marketing personnel to ensure wide distribution & penetration of its

products.

Export Sales

In FY 08-09, approximately 15% of gross turnover of theCompany was accounted from the markets of MiddleEast and Bangladesh.

The same is expected to increase to 20% in FY 09-10and up to 30% in FY 10-11

Overseas 15%

India 85%FY 2008-09


12/15



Major Clients Domestic & Foreign

Major Clients Domestic

(Rs. in Million)

Major clients Foreign(Rs. in Million)

S. No. Name of the client Location FY 07-08 FY 08-09

1 Mother Dairy Foods Processing Ltd Delhi 260.00 550.00

2 Delhi Milk Scheme Delhi 35.00 100.00

3 Britannia Industries Ltd New Delhi - 45.00

4 ITC Limited Bangalore 12.50 15.00

5 Parle Products Ltd Mumbai 15.00 3.00

6 Metro Dairy Ltd Calcutta 10.00 -

7 Heritage Foods Ltd Hyderabad 7.00 -

8 Amrit Banaspati Co Ltd Gaziabad 8.00 15.00

9 Modern Dairies Ltd Karnal 40.00 -

10 RCDF J aipur 10.00 -11 Vadilal International Ltd Ahmedabad - 10.00

12 The Kempco Ltd Puttur- Karnataka 15.00 -

Total 412.50 738.00

S. No. Name of the client Location FY 08-09

1 Unicare International Co. Ltd Bangkok, Thailand 3.20

2 Uhrenholt A/S Denmark

3 Honicomb Group Switzerland 66.00

4 Meghna Condensed Milk Industries Bangladesh 5.30

5 Altawafooq For Food Trading Amman, J ordan 29.10

6 Danish Condensed Milk BD Ltd Bangladesh

7 Intermac Trading Pty Ltd Australia

8 Ulhasmir Mohammad Ltd Afghanistan 6.20

9 Interfood BV Netherlands 6.40

10 Pran Dairy Ltd Bangladesh 28.20


13/15



Financial Highlights (Historical)

(Rs. in Million)

2005-06 2006-07 2007-08 2008-09Particulars

Audited Audited Audited Provisional

Domestic Sales 917.70 1313.60 1980.70 2000.00

Export Sales 79.00 193.20 272.80 300.00

Total Sales 996.70 1506.80 2253.50 2300.00

% rise/ fall (-) in net sales - 51.18 49.56 20.60

Operating Profit after interest 16.50 33.80 53.90 50.30

Profit Before tax 17.00 35.60 55.40 51.60

Profit After Tax 11.00 25.50 41.60 41.30

Paid up Share Capital 42.50 58.50 60.00 60.00


14/15



Proposed Expansion

Proposed Expansion Plans

In order to cater to the increasing demands from overseas market, the C ompany plans to increase its processing

capacity from the existing 0.65 mln ltrs milk per day to 1.20 mln ltrs per day and then to 1.50 mln ltrs milk per day.

The cost of the project and means of financing would be:

(Rs. in Million)

Cost of Project Means of Finance

Particulars Rs. Particulars Rs.

Building 50.00 Equity 500.00

Plant & Machinery & Utilities 325.00 Term Loan 150.00

Misc. Fixed Assets 15.00Preliminary & Pre-Operative Expenses 10.00

Working Capital Margin Money 250.00

Total 650.00 Total 650.00

Transaction Overview

Funding Required INR 500 mn

Instrument Equity / Convertible Equity

Dilution At the entity levelStake offered Depending on valuation and further discussions

Pricing As per mutual discussions

Duration 3 5 years


15/15

Documents

Project Taj Information Memorandum May'09